Bitvavo to prefund locked DCG assets worth $296.7M amid liquidity crisis

The Digital Currency Group and its affiliates (DCG), which manages $296.7 cardinal (280 cardinal euros) successful deposits and integer assets of crypto speech Bitvavo for off-chain staking services, suspended repayments citing liquidity problems amid the carnivore market. However, Bitvavo announced to prefund the locked assets, preventing DCG-induced work disruption for users.

With users proactively exploring self-custody options arsenic a means to safeguard their funds, an acute liquidity situation is expected to loom implicit exchanges. DCG cited liquidity problems arsenic it suspended repayments, temporarily halting users from withdrawing their funds. Bitvavo, connected the different hand, decided to prefund the locked assets to guarantee that nary of its users are exposed to DCG liquidity issues.

“The existent concern astatine DCG does not person immoderate interaction connected the Bitvavo platform,” work the announcement arsenic the institution guaranteed nary work disruption to its users. According to Bitvavo, DCG intends to stock a program for reimbursing the outstanding deposits implicit time.

Moreover, Bitvavo maintains that DCG’s indebtedness volition person nary antagonistic interaction connected its day-to-day operations arsenic the institution “has been making a nett since its inception and is successful a financially coagulated position.” The institution further reassured the presumption quo adjacent if DCG failed to support their extremity of the bargain up.

Bitvavo manages astir $1.7 cardinal (1.6 cardinal euros) successful deposits and integer assets, which are held 1:1 and afloat redeemable by the users.

Related: Bitcoin takes liquidity adjacent $17K arsenic US dollar shows weakness pre-CPI

Owing to the monolithic outflow of funds from exchanges, Binance — the crypto speech with the highest trading measurement — suffered from a diminution successful liquidity.

— Nansen (@nansen_ai) December 13, 2022

According to Nansen technician Andrew Thurman, the driblet successful liquidity whitethorn person been partially caused by ample marketplace makers exiting the exchange.